Telecom Italia to Get Lighter Rules for Full Network Spinoff

By Daniele Lepido -
Jul 9, 2013

Telecom Italia SpA (TIT) should consider
giving up control of the fixed-line network it’s planning to
spin off in order to win regulatory concessions, according to
the president of Italy’s communications authority.

Telecom Italia has argued that lighter regulations are
crucial for the spinoff, a move that could raise funds for
repaying debt and set a precedent for Europe’s indebted
carriers. Company directors on May 30 approved the plan to
separate the grid. The assets are valued at about 14 billion
euros, a person familiar with the matter said in May.

The former phone monopoly should include in the separation
plan not only passive assets such as unlit fiber and copper
lines but also active components, Cardani said. Such assets
include so-called digital-subscriber-line access multiplexers.

‘Regulatory Dividend’

Telecom Italia Chief Executive Officer Franco Bernabe, who
attended the meeting today, said the carrier isn’t “seeking
discounts on the spinoff plan but only an adequate regulatory
dividend because our project is highly competitive.”

The shares rose 3.3 percent to 53.7 cents at 2:19 p.m. in
Milan. The stock is down 21 percent this year, valuing Telecom
Italia at 9.8 billion euros. The carrier said last week it had
ended talks with Hutchison Whampoa Ltd. (13) to combine their
wireless assets in Italy.

While phone companies have tried separating fixed-line
businesses before, fully carving out an access network --
considered strategic by many governments -- would be unseen
among European carriers.

A separation of the fixed-line grid, ensuring rivals access
to Telecom Italia’s transmission network, also “may be an
opportunity to develop Italy’s ultra-broadband services,”
Cardani said.

Telecom Italia has said that it could sell a stake in the
separated company to state lender Cassa Depositi e Prestiti.